Overnight markets
eCBOT grain futures have bounced modestly higher overnight following last night's steep losses.
The USDA crop progress report released after the close showed corn and soybean progress lagging. Whilst this was not unexpected it was enough to encourage some light buying this morning.
Corn good/excellent was raised 2 points to 64%, in line with expectations, soybeans good/excellent were left unchanged at 59% when a modest improvement had been anticipated.
Wheat contained the biggest surprise in last night's report where 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather.
Wheat is around 4-5c firmer overnight, with corn around 3c firmer and soybeans around 10c higher.
USDA Crop Progress Report Highlights
In Monday night's USDA crop condition report corn rated good/excellent rose two percentage points to 64% G/E. This was in line with analyst's expectations for an increase of 1-3 points. Corn percent silking was seen at 13%, well below the five year average of 36%.
Soybeans good/excellent was unchanged from last week at 59%. Analysts had been expecting an increase of 1-3 points. Soybeans blooming was seen at 26%, well below the five year average of 45%, but in line with trade ideas of 25%.
Winter wheat was seen at 62% harvested, slightly lower than the five year average of 70%. This is in line with trade expectations.
Perhaps the biggest surprise was in spring wheat with the good/excellent category pegged at 61%, eight points lower than last week. Traders had been expecting conditions to remain unchanged to two points lower.
USDA Attache: Record 2008-09 Wheat Area Seen In Australia
Total area planted in 2008/09 to wheat in Australia is forecast by the US attache at 14.0 million hectares, up on the previous forecast submitted. If achieved, this area would represent an all time record easily surpassing the 13.4 million hectares planted in 2004/05. Record high wheat prices combined with record low sheep numbers has likely driven planted area to record levels.
The attache forecasts total wheat production for 2008/09 at 22.4 MMT, down on his previous forecast. Below average rainfall in some key grain growing regions has reduced expectations for wheat production despite an increase in forecast planted area. Given average climatic conditions, and allowing for some variation in the final area number, the atache sees the scope for Australian wheat production varying between 20.2 and 24.7 MMT. Climatic conditions outside of those considered "normal" would likely push production outside this range.
This production forecast assumes an average yield of around 1.6 MT/Ha. This figure remains slightly under the 10 year average of 1.64 MT/Ha, according to historic ABARE data.
London wheat crashes lower
London wheat futures are sharply lower today taking a lead from eCBOT. November is down GBP1.50 at GBP141/tonne and March down GBP2.70 at GBP144.80/tonne.
November is down GBP14/tonne in the last fortnight.
The USDA Friday forecast the world wheat crop at a record high 664 million tons, which is up 1.3 million tons from last month's projection and an increase of 53 million tons or 8.8% on the year, which is adding some pressure.
Helping to drive the upward revision, USDA raised its forecast for European Union wheat production 1.7 million tons to 141.70 million. This is a jump from 119.5 million in 2007-08.
Amplifying the large crop sentiment, the French Agriculture Ministry Friday forecast French soft wheat output to rise 19% on the year to 37 million tons.
The Spanish Agriculture Ministry last week raised its estimate for the country's winter cereal crop to 18.95mmt from 15.81mmt previously, mainly due to favourable rains during spring / early summer.
The Association of German farming cooperatives estimates the German 2008 cereal crop at 46.1mmt, an increase of 14% on last year. Wheat crop is estimated at 23.332mmt, an increase of 13%.
Recent rains in Europe, and particularly the UK, are delaying the harvest and may affect quality increasing the amount of feed grade wheat available.
The barley fields around here are looking just about ready to cut if they could get a week without rain. Certainly some of the fields I was looking at yesterday contained some very bold looking samples.
Petrol prices: stop whinging you Septics*
I filled the car up at the weekend as we were going away to the coast for a few days. It's a not particularly large Peugeot 206 diesel. Times are hard, with all this free blogging I do etc, etc.
It was over sixty quid to fill the thing, certainly the dearest fill-up I've ever done. With consumers in the US baulking at the price of "gas" over there topping $4/gallon I did a quick Google and £1.32/litre for diesel here is equivalent to a fiver a US gallon, or in round figures $10. More than double what the Septics* are whinging about!
In the US taxes account for around 19 percent of the price of fuel at the pumps, over here its 81.5 percent!
Meanwhile in oil-rich Venezuela, petrol is cheaper than milk at 12c/gallon and you can fill up a truck for the price of a Big Mac. Add to that Caracas reputedly has the highest women:men ratio in the world. Where did I put my passport?
*Septic = Septic tank = Wooden plank = Yank
Tom Hanks plural, Americans
Oil price eases back to $143 a barrel
Oil fell by $2 to around $143 a barrel this morning as the dollar rebounded following a United States plan to restore confidence in its financial sector.
The US government at the weekend unveiled an emergency plan to shore up embattled mortgage giants Fannie Mae and Freddie Mac - which control $5 trillion in debt - easing concerns about the wider economy and helping the dollar bounce off its near-record against the euro.
US light crude for August delivery was $1.76 down at $143.32 a barrel by 10am. London Brent crude was $1.59 down at $142.90.
US crude hit a record high of $147.27 last Friday, as concerns about threats to global oil supplies and a deteriorating US economic landscape hit financial markets, driving investors to seek the relative safety of commodities.
Oil initially fell by more than $2.50 today, but pared those losses as Brazilian oil workers began a five-day strike, once again highlighting supply fears in a tight market.
Traders were also on the watch for any news of supply disruptions from Nigeria, where militants abandoned a ceasefire, and from Iran amid tensions with Israel and the west.
"Oil's fall this morning is generally due to gains in the US dollar as well as some profit-taking in the market," said Gerard Burg, a commodities analyst from the National Australian Bank in Melbourne.
Ukraine Harvests 6.478 Million Tons Of Grain To July 11
The harvest in Ukrain is progressing well with 6.478mmt cut as of July 11th according the the Ag Ministry there.
Although harvest pace is a little behind 2007 (when heat reduced the crop but afforded for an early start to proceedings), yields continue to impress.
Last year Ukraine harvested 7.2 million tons of grain to July 11 on 3.9
million hectares with the average yield of 1.84 tons a hectare.
This year's 6.478mmt has come from just 2.216 million hectares, with an average yield of 3.08 tons a hectare.
The official government estimate for this season's grain crop is 40mmt, of which approximately half is wheat. Other private estimates peg total grain output higher at around 43.5mmt, with wheat accounting for approximately 22mmt.
If yields continue to come in 50% up on 2007 then the crop could be even bigger than that. Last season's output was 29.3mmt.
Exactly where all this grain is going to go is another question. The country reputedly only has commercial storage facilities for around 27mmt, and is said to be still carrying around 7mmt of grain & oilseeds from 2007's crop.
Its not surprising therefore that they are mopping up much of the world export business at the moment, a trend which looks set to continue awhile yet.
Czech grain harvest seen 8% higher this year
Prague, July 11 (CTK) - Czech grain harvest is estimated by the Czech Statistical Office (CSU) at 6.88 million tonnes this year, up 7.9 percent year-on-year, and oilseed rape harvest is expected to be 7.6 percent higher at 1.11 million tonnes.
Based on this year's first estimates, statisticians said Friday that per hectare yield will be 9.4 percent higher at 4.79 tonnes.
